CHAPTER 2 TYPES OF RETAILERSBy Charissa Hitchcock

RETAILER CHARACTERISTICS

Type of Merchandise

Variety and Assortment

Services Offered

Prices and the Cost of Offering Breadth and Depth of Merchandise and Service

RETAILING VIEW 2.1: AMAZON: THE JACK OF ALL (RETAIL)

TRADES AND MASTER OF MANY

Supermarkets

Supercenters

Warehouse Clubs

Convenience Stores

GENERAL MERCHANDISE RETAILERS

Department Stores

Full-Line Discount Stores

Category Specialists

Specialty Stores

Drugstores

Extreme-Value Retailers

Off-Price Retailers

GENERAL MERCHANDISE RETAILERS

Extreme-Value Retailers

Extreme-value retailers, also called dollar stores, are small discount stores that offer a broad variety but shallow assortment of household goods, health and beauty care products, and groceries. The largest extreme-value retailers are Dollar General and Family Dollar.

Dollar General and Family Dollar sell products up to $20.00. The names imply good valueDollar tree on the other hand is a dollar purist.

WALMART. ALWAYS READY FOR A GOOD COMPETITIVE BATTLE

Walmart is now opening smaller stores called Walmart Express in urban locations and creating smaller and less expensive packages to better compete.

smaller

OFF-PRICE RETAILERS

Off-price retailers offer an inconsistent assortment of brand-name merchandise at a significant discount off the manufactures’ suggested retail price (MSRP).

The largest off-price chains are TJX Companies (TJ Maxx, Marshalls, Winners, HomeGoods, TKMaxx, AJWright, and HomeSense), Ross Stores, Burlington Coat Factory, and Big Lots. Overstock.com and Bluefly.com are the largest Internet off-price retailers.

OFF-PRICE RETAILERS

Much of the merchandise is bought opportunistically from manufacturers that have overruns, canceled orders, forecasting mistakes causing excess inventory, closeouts, and irregulars.

Closeouts are end-of-season merchandise that will not be used in following seasons.

Irregulars are merchandise with minor mistakes in construction.

FLASH SALES AND OUTLET STORES

They are called flash sales because each day at the same time, members receive an email that announces the deals available. Each deal lasts for a specific and limited time, and the sales are fist-come, first-served.

A special type of off-price retailer is the outlet store. Outlet stores are off-priced retailers owned by manufacturers or retailers. Those owned by manufacturers are also referred to as factory outlets.

SERVICE RETAILERS

Service retailers, or firms that primarily sell services rather than merchandise, are a large and growing part of the retail industry.

Busy parents in two-income families are willing to pay to have their homes cleaned, lawns maintained, clothes washed and pressed, and meals prepared so that they can spend more time with their families.

SERVICE RETAILING

Type of Service Service Retail Firms

Airlines Jetblue, Southwest, Delta

Banks GWB, US Bank, Wells Fargo

Entertainment Disney World, Six Flags, Chuck E. Cheese

Home Maintenance Home Depot, Menards, Lowe’s

Restaurants Perkins, Golden Phoenix, Shooters

Weight loss Weight Watchers, Jenny Craig, Curves

Video Rental Blockbuster, Mr. Movie

CONTINUUM OF MERCHANDISE AND SERVICES RETAILERS

DIFFERENCES BETWEEN SERVICE AND MERCHANDISE

RETIALERS • Intangibility

•Simultaneous Production and Consumption

•Perishability

• Inconsistency

• Intangibility Services are less tangible than products—customers cannot see or touch them. They are performances or actions rather than objects.

• Simultaneous Production and ConsumptionProducts are typically made in a factory, stored and sold by a retailer, and then used by consumers in their homes.

• PerishabilityServices are perishable. They cannot be saved, stored, or resold. Once an airplane takes off with and empty seat, the sale is lost forever.

• InconsistencyProducts can be produced by machines with very tight quality control, so customers are reasonably assured that all boxes of Cheerios will be identical. But because services are performances produced by people, no tow services will be identical. Example is two tax preparers may prepare your taxes differently and come up with the same number at the end and still charge you the same price. At this point quality and service determine if you gain or lose a customer.

TYPES OF OWNERSHIP

Independent, Single-Store Establishments

Corporate Retail Chains

Franchising

TYPES OF OWNERSHIP

Independent, Single-Store Establishments

Retailing is one of the few sectors in most countries in which entrepreneurial activity is extensive. Many retail start-ups are owner-managed, which means management has direct contact with customers and can respond quickly to their needs.

TYPES OF OWNERSHIP

Corporate Retail Chains

A retail chain is a company that operates multiple retail units under common ownership and usually has centralized decision making for defining and implementing its strategy.

Retail chains range in size from a drug store with two stores to retailers with thousands of stores, such as Walmart, Best Buy, and Macy’s.

TYPES OF OWNERSHIP

Franchising

Franchising is a contractual agreement in which the franchisor (the company) sells the rights to use its business trademark, service mark, or trade name, or another commercial symbol of the company, to the franchisee for a one-time franchise fee and an ongoing royalty fee, typically expressed as a percentage of gross monthly sales. More than 40% of all U.S. retail sales are made by franchisees, and this type of retail ownership is growing around the world.